Life insurance has traditionally been based on predictable life events, but that foundation is weakening as those milestones become less reliable and less frequent. The industry faces slowing growth and rising costs. The customer base expects a completely different type of interaction, especially when it comes to payments.
Kevin OstranderChief Revenue Officer at One companytold PYMNTS in a recent interview that the pressures are widespread and ongoing. “It’s a tight margin in their industry, and they have increasing operating costs,” he said, citing inflation and slowing premium growth as additional pressure.
Fragmentation restricts the payments experience
It remains difficult to modernize the payments infrastructure that underpins life insurance. Ostrander described “highly fragmented, complex and siled business processes,” where products exist on different systems and legacy platforms, which limits agility.
These constraints lead to more than just slow innovation. They shape the policyholder experience in ways that are increasingly out of step with expectations formed in other industries. When billing and payment systems don’t communicate cleanly, insurers struggle to achieve consistency across onboarding, servicing and collections processes.
This disconnect has turned payments into a clear point of friction.
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Slow growth and high pressures
Growth remains weak, and the composition of the customer base is changing. Expectations around engagement and purchase trips are shifting along with demographics, Ostrander said, forcing airlines to rethink how they interact with policyholders.
At the same time, traditional incentives for purchasing life insurance are no longer reliable. “Lower marriage rates, fewer children, lower home ownership, these parameters are no longer the drivers for purchasing life insurance,” he said.
Carriers are responding by rethinking product design and engagement strategies, including bundling services and building more ongoing relationships with customers. However, these efforts rely on a payments experience that can support ongoing interaction rather than one-time transactions.
Payments as a driver of loyalty and persistence
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This shift has increased the role of payments in the customer lifecycle.
Billing is the most common interaction among policyholders, and when it’s not improved, it “challenges growth,” Ostrander said.
The consequences are operational and financial. Payment failures, insufficient funds, and processing delays create additional maintenance work while increasing the likelihood of the policy lapse. Ostrander noted that many carriers manage a constant volume of payment inquiries associated with unsuccessful transactions and settlement issues.
In that environment, improving the payments experience becomes directly linked to continuity rates and revenue stability.
What modernization looks like in practice
The contrast between ancient processes and modern methods is evident in the preparation phase. Ostrander described a traditional workflow in which customers fill out forms, provide account details, and rely on manual submission. It can take weeks for errors or timing issues to appear, resulting in a chain of follow-ups through carriers and agents.
The modern approach replaces that process with a digital workflow that verifies information in real time and features direct processing, he said, noting that this reduces errors and shortens the path from application to activation.
The broader goal is to support self-service, faster processing, and flexible payment options that align with how customers already transact elsewhere.
Towards a payments-centric model
Standard capabilities in other sectors are moving to the life insurance baseline, including digital-first engagement and seamless payment management across the policy lifecycle.
“The technology is there to provide that experience,” Ostrander said. “It is now up to carriers to embrace this technology and deliver the experience your customers are looking for.”
